BOMMANAKERE SOMASEKHAR MAHESH,CHIKKAMAGALURU vs. THE INCOME TAX OFFICER, WARD-1, CHIKKAMAGALURU

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ITA 1978/BANG/2026Status: DisposedITAT Bangalore12 October 2026AY 2017-1812 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay of 67 days in filing the appeal, finding sufficient cause based on the assessee's serious medical condition, citing principles from Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) and People Education & Economic Development Society Vs/ ITO (100 ITD 87). Regarding the addition of Rs. 8,49,000/-, the Tribunal noted that while the AO accepted Rs. 3,88,000/- as closing cash balance, the remaining amount was claimed from personal savings, wife, and parents, which was not substantiated with documentary evidence by the lower authorities. However, the assessee before the Tribunal claimed to have furnished a corrected cash book and supporting reconciliation during the first appellate proceedings, which the CIT(A)'s order seemed to contradict. In the interest of justice, equity, and fair play, the Tribunal decided to remit the entire issue in dispute back to the file of the AO for a fresh decision, directing the assessee to produce the corrected cash book along with sales, purchase, and ledger accounts. The AO was directed to grant a reasonable opportunity of being heard to the assessee.

What were the facts?

The assessee, Bommanakere Somasekhar Mahesh, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Bangalore, against the order of the Additional/Joint CIT(A)-4, Mumbai, dated 29.12.2025, for Assessment Year 2017-18. The appeal was filed with a delay of 67 days, which the assessee attributed to a serious medical condition. The revenue objected to the condonation of delay. The core dispute revolves around the addition of Rs. 8,49,000/- as unexplained investment under Section 69 of the Income Tax Act, 1961. The assessee claimed the cash deposits during the demonetisation period were from personal savings, wife, and parents, and that an inadvertent error in the cash book during assessment proceedings led to the issue.

What were the issues?

1. Whether the Tribunal should condone the delay of 67 days in filing the appeal, considering the assessee's submission of a serious medical condition as sufficient cause, as argued by the assessee, while the revenue objected due to lack of substantiating medical records. 2. Whether the addition of Rs. 8,49,000/- as unexplained investment under Section 69 of the Act, confirmed by the CIT(A), is sustainable, given the assessee's claim of a corrected cash book and explanation of sources, which the assessee contended was erroneously disregarded by the CIT(A) despite being furnished. The revenue relied on the lower authorities' orders. 3. Whether the CIT(A) erred in observing that no new facts or documentary evidence were furnished, which the assessee argued was factually incorrect and contrary to the record, as a corrected cash book and explanations were provided. The revenue relied on the lower authorities' findings.

Which sections of the Income-tax Act were involved?

Section 69,Section 250,Section 253(5),Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

For Appellant: CA Sandeep Chalapathy, A.R
Hearing: 14.07.2026Pronounced: 12.10.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

This appeal at the instance of the assessee is directed against the order of the ld. Addl./JCIT(A)-4, Mumbai dated 29.12.2025 vide DIN & Order No. ITBA/APL/S/250/2025-26/1084176055(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2017-18.

2.

The assessee has raised the following grounds of appeal:-

1.

That the order passed by the learned Commissioner of Income Tax (Appeals) dated 29.12.2025, in so far as it is prejudicial to the interests of the Appellant, is bad in law, erroneous, arbitrary, and opposed to the facts and circumstances of the case.

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 2 of 12 2. That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in confirming the addition of Rs. 8,49,000/- as unexplained investment under Section 69 of the Income Tax Act, 1961 (‘the Act’ in short).

3.

That the learned CIT(A) erred in law and on facts in observing that no new facts or documentary evidence were furnished, which finding is factually incorrect and contrary to the material placed on record during the appellate proceedings. 4. That the learned CIT(A) has failed to appreciate that the Appellant had furnished a corrected cash book during the appellate proceedings, duly explaining the source of cash deposits, and had also clarified that the cash book filed during the assessment proceedings contained inadvertent errors which were subsequently rectified and placed on record while the appeal was pending. 5. That the learned CIT(A) has further erred in failing to consider the corrected and additional evidence furnished by the Appellant, which was essential for proper adjudication of the issue, despite the settled position of law that appellate authorities are duty-bound to consider all material necessary to determine the correct tax liability.

6.

Without prejudice to the above grounds of appeal, that the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not assessing the gross profit of the total cash deposits instead of treating the entire cash deposits as income of the appellant. 7. That the learned lower authorities erred in law and on facts in levying tax at 60% u/s. 115BBE of the Act even though the said section came into effect only from 15.12.2016 and therefore, erred in law and on facts in invoking section 115BBE for the deposits made prior to 15.12.2016.

Each of the above grounds is without prejudice to one another, it is prayed that the Hon’ble Income Tax Appellate Tribunal, Bangalore to add, delete, amend or otherwise modify one or more of the above grounds either before or at the time of hearing of this appeal.

3.

At the outset, the ld. A.R. of the assessee submitted that there is a delay of 67 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee also drew our attention on an application for condonation of delay dated 05.05.2026, which is reproduced below for ease of reference and record:-

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 3 of 12

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 4 of 12

4.

On going through the above application for condonation, we find that the assessee could not file the appeal within the prescribed period for the reason that the assessee was suffering from a serious medical condition during the relevant period, which rendered him incapable of taking timely steps to file the appeal. Owing to such illness, the assessee was also unable to identify and engage a suitable authorized representative within the prescribed time and was unaware of the immediate course of action required. The ld. A.R. also submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. He thus prayed to condone the delay and requested to consider the issues raised by the assessee on merits.

5.

On the contrary the ld. D.R. vehemently objected for granting the condonation of delay and submitted that the assessee had neither submitted any details of his illness nor any medical records to substantiate his claim.

6.

We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before us. We are of the considered opinion that the assessee has demonstrated sufficient cause in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeals within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing these appeals within the prescribed time. We have gone through the reasons explained by the assessee in which we find

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 5 of 12 that the assessee was suffering from a serious medical condition during the relevant period, which rendered him incapable of taking timely steps to file the appeal.

6.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:

(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.

(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of non-deliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 6 of 12 to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.

6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.

6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 67 days cannot be considered to be

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 7 of 12 inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 67 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.

7.

Now having condoned the delay in filing the appeal, the brief facts of the case are that the assessee is engaged in the business of trading in fast moving consumer goods (FMCG) under his proprietary concern running under the name and style of M/s Sri Maruthi Enterprises. The assessee filed his return of income for the A.Y.2017-18 on 26.12.2017 declaring total income of Rs.15,87,080/-. Thereafter, the said return was processed u/s 143(1) of the Act on 06.05.2018 accepting the income returned. Subsequently, the said return was selected for ‘complete scrutiny’ through CASS to verify the abnormal increase in cash deposits during demonetisation and accordingly notice u/s 143(2) of the Act as well as 142(1) of the Act was issued calling for specific details. In response to the above notices, the assessee had filed the relevant particulars.

7.1 The AO on verification of the particulars filed by the assessee seen that the assessee had made the following cash deposits into the bank account maintained with IDBI Bank, Chikmagalur during the period from 09.11.2016 to 31.12.2016 as below:-

PARTICULARS AMOUNT IN Rs.

10.11.2016 8,00,000/-

11.11.2016 3,19,000/-

14.11.2016 73,000/-

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 8 of 12

22.11.2016 45,000/-

Total 12,37,000/-

When asked by the AO to explain the source of the same, the assessee had filed the submissions as per which the sources for the same are explained below:- PARTICULARS AMOUNT IN RS. Closing balance of cash in business 3,88,000/- as on 08.11.2016 Personal savings accumulated over 2,48,000/- several years Amount received from wife 2,45,000/- Amount received from Parents 3,56,000/- Total 12,37,000/-

The AO accepted the cash balance of Rs.3,88,000/- being the closing cash balance available in the books of accounts as on 08.11.2016. However, the balance sum of Rs.8,49,000/- (Rs.12,37,000 – Rs.3,88,000) on account of own drawings over a period of time and the amount received from his wife and parents were not accepted as not supported by any documentary evidences and having no prima facie value. The AO concluded the assessment proceeding by rejecting the explanation of the assessee and holding the sum of Rs.8,49,000/- as unexplained investment made u/s 69 of the Act r.w.s 115 BBE of the Act and assessed on a total income of Rs.24,36,080/-.

8.

Aggrieved by the order of the AO dated 04.09.2019 passed u/s 143(3) of the Act, the assessee preferred an appeal before the ld. Addl./JCIT(A)/CIT(A)/NFAC.

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 9 of 12 9. The ld. Addl./JCIT(A)-4, Mumbai dismissed the appeal of the assessee by observing that the case was selected for complete scrutiny to verify the abnormal increase in cash deposits during the demonetisation period. The assessee could not explain satisfactorily the source of cash deposits. The assessee submitted that Rs.3,88,000/- was his closing balance as on 08.11.2016 was accepted by the AO and treated the said amount as explained. However, for the balance amount of Rs.8,49,000/- the assessee submitted that it was received from his wife and parents and also from his own past years savings. The explanation given by the assessee was not supported by any documentary evidence. The ld. Addl./JCIT(A) held that mere explanation without supporting evidence is not sufficient to rebut a presumption u/s 69A of the Act. No new facts or any new documentary evidence in support his claim was submitted by the assessee before the ld. Addl./JCIT(A). In the opinion of ld. Addl./JCIT(A), the AO had properly investigated/pointed out the facts of the case, the AO had verified the bank statements, ROI, summary of withdrawals from bank accounts, however, the assessee failed to reconcile the availability of such large cash immediately preceding the deposits and accordingly the action of the AO treating the same as unexplained investment u/s 69 of the Act is legally correct and factually sustainable.

10.

Aggrieved by the order of the ld. Addl./JCIT(A)-4, Mumbai dated 29.12.2025, the assessee has filed the present appeal before this Tribunal.

11.

Before us, the ld. AR of the assessee vehemently submitted that during the first appellate proceeding, the assessee identified that the cash book furnished during the assessment proceeding inadvertently excluded certain tax receipts from sales made while preparing the cash flow. This omission resulted in an incorrect

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 10 of 12 depiction of the cash balance available during the relevant period. Upon identifying the mistake, the assessee prepared and furnished a corrected cash book before the ld. Addl./JCIT(A) demonstrating the correct cash position and the availability of sufficient cash immediately preceding the deposits made during the demonetisation period. However, the ld. Addl./JCIT(A) by affirming the findings of the AO held that apart from the accepted cash balance of Rs.3,88,000/-, the assessee had failed to satisfactorily establish the source of the remaining cash deposits. Further, the ld.AR submitted that the above findings are internally inconsistent with the appellate record and accordingly prayed that one more opportunity may be granted before the AO to substantiate his claim.

12.

The ld. DR on the other hand relied upon the orders of the authorities below and vehemently submitted that the contention of the ld. AR of the assessee that during the first appellate proceeding the assessee identified that the cash book furnished during the assessment proceedings inadvertently excluded certain tax receipts from sales made while preparing the cash flow has to be verified from the sales register, purchase register, cash book and ledger and accordingly conceded that the case may be remitted to the file of the AO to examine the above contention.

13.

We have heard the rival submissions and perused the material available on record. The assessee is engaged in the business of trading in fast moving consumer goods (FMCG) under his proprietary concern running under the name and style of M/s Sri Maruthi Enterprises. Undisputedly, the case of the assessee was selected for ‘complete scrutiny’ to verify abnormal increase in cash deposits during demonetisation. The AO observed that the assessee had deposited cash into his bank account maintained with IDBI Bank during the period from 09.11.2016 to 31.12.2016 amounting

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 11 of 12 to Rs.12,37,000/-. During the course of the assessment proceeding, the assessee explained that the source of cash deposits of Rs.12,37,000/- were closing cash balance in business as on 08.11.2016 was Rs.3,88,000/- which both the authorities below have accepted. However, with regard to balance amount of Rs.8,49,000/- claimed to have from personal savings as well as amount received from his wife and parents were not accepted by both the authorities below on the ground that the assessee failed to substantiate his claim by producing any documentary evidences. Now before us, the claim of the ld.AR of the assessee is that during the first appellate proceeding, the assessee identified that the cash book furnished during the assessment proceeding inadvertently excluded certain tax receipts from sales made while preparing the cash flow. This omission resulted in an incorrect depiction of the cash balance available during the relevant period. Upon identifying the mistake, the assessee prepared and furnished a corrected cash book before the ld. Addl./JCIT(A) demonstrating the correct cash position and the availability of sufficient cash immediately preceding the deposits made during the demonetisation period. However, on perusal of the order of the ld. ADDL/JCIT(A), we observed that findings of the ld.ADDL/JCIT(A) is completely contrary to the facts stated by the ld.AR of the assessee. The ld. AR of the assessee, before us claimed that the assessee had produced a detailed written submission together with the corrected cash book and supporting reconciliation. This being so, in the interest of justice, equity and fair play and as requested by the ld.AR of the assessee, we deem it fit and proper to remit the entire issues in dispute to the file of AO to decide afresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce the corrected cash book along with the sales, purchase and ledgers to substantiate his claim. It is ordered accordingly.

ITA No.1978/Bang/2026 Bommanakere Somasekhar Mahesh, Chikkamagaluru Page 12 of 12

14.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 12th Oct, 2026

Sd/- Sd/- (Waseem Ahmed) (Keshav Dubey) Accountant Member Judicial Member Bangalore, Dated 12th Oct, 2026. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order

Asst. Registrar, ITAT, Bangalore. P G Digitally signed by P G RAJANI RAJA Date: 2026.10.21 NI 12:16:55 +05'30'

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